Arrowhead Properties attributes a strong 13.6% distribution growth
Property loan stock company, Arrowhead Properties today reported 13.6% growth in distributions per combined A and B unit for the quarter ended 31 March 2013 compared to quarter ended March 2012.
Mark Kaplan, COO commented: “Arrowhead is proud of its results achieved to date and attributes this to a model designed to outperform the market in terms of income growth per unit.
“The results reflect a well-executed strategy based on strong letting activities and only purchasing yield enhancing acquisitions. “
Arrowhead owns a diversified property portfolio valued in excess of R2,8 billion which is a 100% increase on the size of the portfolio since listing in December 2011.
Vacancy levels have decreased for the six months from 12.67% to 9.8%. This is partially because of a reduction in vacancies in the initially acquired portfolio and new acquisitions which were well let.
Arrowhead transferred 7 properties valued at over R525 million at an average net yield of 11%. The acquisitions are spread across the three sectors R331 million office, R65 million industrial and R129 million retail.
Arrowhead’s gearing ratio is 21% compared to 42% at financial year end in September 2012. The average interest rate over the six month period was 8,28%. “We intend to increase our long term gearing levels to between 35% and 40%.”
Kaplan commented further that the pipeline is looking healthy and growing. Management is confident that a further R300 million worth of property acquisitions will be transferred before financial year end with an average net yield around 11%. There is also a further R300 million of potential properties under due diligence at a similar yield.
Earlier this year, Arrowhead demonstrated its commitment to meet the provisions of the property charter through the acquisition of Indite Property Fund, a 100% black owned entity, into which all Government tenanted properties will be transferred. Arrowhead is busy with the final conditions precedent of the sale agreement.
The Arrowhead A unit price has increased from R6,50 at 30 September 2012 to R7,72 at 31 March 2013, which together with the distribution of 30 cents equates to a total return of 23% for six months.
The Arrowhead B unit price has increased from R5,85 at 30 September 2012 to R7,60 at 31 March 2013, which together with the distribution of 25,14 cents equates to a total return of 35% for six months.
The company is confident it will meet its previous guidance of 10% distribution growth for the financial year ended 30 September 2013.
Arrowhead Properties is the only JSE listed property loan stock company to pay quarterly distributions.